How to Prepare a Data Room for Investor Due Diligence

Due diligence on investors is a crucial part of the investment process. It gives investors the chance to examine the company’s finances and documents as they evaluate risk and decide whether or not to invest in the company. A well-organized and properly prepared data room can help expedite the process, lessen the likelihood of misunderstandings or miscommunication, and increase confidence in the decision of the investor to proceed.

While there are numerous items to include in a data room, this article will outline some of the basic items that all startups must have in place prior to pitching to investors.

Investor Updates

Investor updates are an excellent way to demonstrate to investors that you’re still following through on your plan and moving toward your goals, particularly in the beginning stages of fundraising. This will also give investors a sense of how you’ve progressed since last time they saw you and will help build confidence.

IP Assets

Angels and VCs usually have an interest in businesses’ intellectual property, which can be a significant component of the value of the business. Include patents, trademarks, and other relevant information even if it’s not directly related to http://dataroomnote.com/ your product.

Cap Table

A clear cap-table outlines to potential investors how much ownership you hold, and how it’s broken down. Include your articles of incorporation, which provide legal background for your company’s structure.